JOHANNESBURG (Reuters) – South Africa’s only insurer covering political violence will increase its premiums to cover a rise in reinsurance costs following some of the worst unrest in decades, the head of the state-owned company told Reuters.
Thank you for reading this post, don't forget to subscribe!More than 300 people died and around 3,000 stores were looted when protests and violence erupted in July, sparked by the imprisonment of former President Jacob Zuma but later driven by anger over poverty and inequality.
Sasria, which was set up after private firms stopped underwriting risks relating to political violence due to unrest during apartheid, relied on reinsurance contracts to pay part of the billions of rand in claims it generated.
But the cost of those contracts were now increasing, managing director Cedric Masondo told Reuters by phone.
“We will increase the rate driven by the increase in reinsurance,” he said, adding the timing had not been finalised and declining to say by how much.
A circular communicating the decision to Sasria agents – local private insurers – was published on its website and dated Aug. 4. It said the increase would be effective from Oct. 1.
As the only entity offering insurance coverage for political risks, such as strikes or protests, that could mean firms across the country that want protection are in line for higher premiums, though Masondo said it was still deciding whether all clients would be affected.
The insurer’s standard coverage offered by agents runs to a maximum of 500 million rand ($33 million), while an additional 1 billion rand is available to bigger firms that approach Sasria directly.
Some coverage is also available on the open market, in particular for large corporates looking for protection beyond the 1.5 billion rand maximum Sasria offers.
A senior executive at one global insurer, who declined to be identified, told Reuters that it would also increase its property insurance rates as a result of Sasria’s decision.
($1 = 15.1330 rand)
(Reporting by Emma Rumney and Promit Mukherjee; Writing by Emma Rumney; Editing by Mike Harrison)
